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Use the following information for the next 2 questions: Grasshopper Inc. is considering a 5-year project...

Use the following information for the next 2 questions:

Grasshopper Inc. is considering a 5-year project amid the pandemic shutdown. They need to buy a new IT system for $32,000. The new system also requires an increase in net working capital of $4,000.

Grasshopper expects $16,000 in sales and $7,400 annual operating expenses. Annual depreciation is $8,000.

If the firm's tax rate is 21% and its cost of capital is 12%,

59) How much is their annual OCF?

Question 59 options:

	$8,474
	$600
	$8,599
	$5,277

What is the NPV of this project assuming the same CF for 5 years?

Question 60 options:

A) 2,547

B)-5,453

C)-1,453

D)1,423

Expert Solution

59) How much is their annual OCF?

$8474 Option A

60. What is the NPV of this project assuming the same CF for 5 years?

-$5453 Option B

Please dont forget to upvote

jeff jeffy answered 1 year ago

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